if i was you, i'd wipe the 5gb partition and install xp on it.. 5gb is a perfect size for that (my xp is on a 2gb partition and its only slightly cramped).. after that you wont have 98 anymore, and you'll have a fresh install of xp which will boot off that drive. im not sure whether or not xp would set up the second partition to be bootable. after you have xp installed on the 5gb, you could copy whatever files you want from the installation on the other partition then delete the windows folder off that one.
if you just want to take win98 out of the boot loader, boot into xp, open control panel, system, advanced tab, and click settings under startup and recovery..
you can then click edit to edit the file for the boot loader.. take the entries for win98 out..
for reference, here's mine .. with xp on the first partition of the primary master hd:
[boot loader]
timeout=30
default=multi(0)disk(0)rdisk(0)partition(1)\WINDOWS
[operating systems]
multi(0)disk(0)rdisk(0)partition(1)\WINDOWS="Microsoft Windows XP Professional" /fastdetect
your xp one probably looks something like
default=multi(0)disk(0)rdisk(0)partition(2)\WINDOWS
youd want to leave that if you choose to keep xp on the second partition.
afaik boot.ini is only stored on the hd for the purpose of editing it .. im pretty sure (but not absolutely sure) that its stored in the mbr of the hd after youre done messing with it..
id back up anything you dont want to lose first though .. never know what might go wrong.. hehe